The Role of Multinational Corporations (MNCs) in

Developing R&D in Thailand: the Knowledge Flow Between

MNCs and University
Lugkana Worasinchai1 and Aurilla Aurelie Arntzen Bechina2
1
Bangkok University, Bangkok, Thailand
2
Buskerud University College, Kongsberg, Norway
lugkana.w@bu.ac.th
aurillaa@hihm.no
Abstract: During the last decade, the Thai government has recognized that Thailand needs to move toward an
economy not only based on the cheapness of labour but also based on its intellectual capital and innovation
capability. Therefore, the country has set up initiatives and specific policy to attract multinational corporations that
could contribute to raise the research and development capacity of the country. Several studies have been
undertaken to evaluate the role that Multinational corporations could play in knowledge creation, technology
diffusion and development of potential R&D within South East Asia. Amongst the several approaches
investigating the factors fostering Innovation in developing countries, one strategy would be to strength the
Universities-Industries (UI) relationship. The success and failure of the University-Industry linkage has been
widely discussed, but there is still a need to understand the dimensions impacting on the willingness of
multinational corporations to share knowledge with Thai Universities. This paper discusses the balance of factors
(industrial characteristics, firm characteristics and business models) that can play a substantial role in enhancing
the knowledge sharing mechanisms.
Keywords: knowledge sharing, triple helix, Information communication technology, culture, empirical knowledge
sharing investigation

1. Introduction
The 10th National Economic and Social Development Plan (2007-2011) of Thailand highlights that in
order to foster Innovation, it is crucial to identify the mechanisms contributing to sustaining strong
economic performance, and to facilitate private investment from both national and international
companies. Facing fierce competition from neighboring countries such as Malaysia, the Philippines,
Vietnam, and Cambodia, Thailand needs to move toward an economy not only based on the
cheapness of labour but also based on its intellectual capital and innovation capability. Hence,
Thailand needs to attract multinational corporations that will contribute to raising the research and
development capacity of the country.
Studies have been undertaken in order to evaluate the effects of Multinational Corporations (MNCs)
on developing countries (Abdul-Gafaru, 2006, Meyer, 2004). In the last two decades, globalization
has contributed to significant increases in foreign investment in developing countries, and thus
bringing some of them more political and structural stability. In addition, it is commonly admitted that
MNCs play a role in creating new kind of jobs and therefore can contribute to economic growth and
the increase of welfare. As well, the infiltration of MNCs in developing countries has a potential to
augment the salary level of employed people, hence increasing the buying power of the local citizens,
which in turn will lead to increased tax payments. The availability of more resources will allow the
government to spend more money in social welfare areas such as education, health care, and
infrastructure building.
The investments by foreign companies make the developing countries more receptive to social and
economic changes as they enter in the global market and they have to adopt modern values and
business practices. The host country should facilitate the operations of MNCs because their direct
investments are much easier to obtain than funding from traditional channels such as the World Bank,
national development organizations, or non profit organizations.
There is a growing recognition that MNCs could potentially impact several dimensions that are crucial
for developing countries aiming at improving their competitiveness. These dimensions include capital,
competences/skills, exports, technology/processes and infrastructuresee Figure 1.
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Reference this paper as
Worasinchai, L and Bechina, A, A, A.(2010) The Role of Multinational Corporations (MNCs) in Developing R&D
in Thailand: the Knowledge Flow Between MNCs and University Electronic Journal of Knowledge Management
Volume 8 Issue 1 (pp171 - 180), available online at www.ejkm com

Electronic Journal of Knowledge Management Volume 8 Issue 1, 2010 (171 - 180)

CAPITAL
EXPORT

COMPETITIVNESS
CAPABILITY
PROCESS &
TECHNOLOGY

INFRASTRUTURE
CAPABILITY

Competences
/skill

Figure 1: Five dimensions of competiveness

Capital represents an essential economic asset in developing countries. Foreign Direct Investment
(FDI) provided by MNCS contributes to a large extent to the flow of needed resources.
Infrastructure is a key element to attract potential foreign investors. A poor infrastructure presents
many impediments to progress. The host countries are often engaged in improving their infrastructure
in terms of road building, telecommunication, easier access to some parts of the country, and so forth.
Building Export capacity is very important for developing countries if they want to benefit fully from
international trade and investment opportunities. Therefore, the government must seek to develop a
regulatory framework that could assist local and regional areas in designing and implementing active
policies for building export competitiveness. For example, many foreign companies in Thailand are
offered to settle in a free trade zone, with some economic benefits and tax incentives, in order to
facilitate exports.
Technology development and work processes improvement needs differ greatly in developing
countries, and even in some cases between regions. For example, Bangkok or the South of Thailand
is more developed than some Northern areas. Building industrial capabilities requires technology
cooperation between local and international companies, government and research/education
institutions. For instance, in order to deliver state-of-the-art manufacturing technologies, basic
services such as electricity, water, raw material and work practices, are needed before sustainable
industries can be put in place. MNCs contribute greatly in providing the foundation for technological
development and industrial growth providing examples to indigenous companies or subcontractors
that might need to use state-of-the-art equipment or more efficient technology.
Building Competence/skill of local workers has proved to be essential to the successful transfer and
diffusion of technologies and knowledge. Whenever it is possible, MNCs prefer to hire local people
than use expatriate employees. However, the lack of an adequately skilled workforce in the operating
region presents a challenge to overcome. Low education levels of potential employees are a
particular impediment to maximizing a local employee base. MNCs are often engaged in capacity
building efforts and sometimes deliver education and training to groups in order to help them increase
production levels and to perform work routines more efficiently. There is a recognised need to adjust
approaches to education and training based on local conditions and local knowledge and skill levels.
There are clear benefits to engaging local based trainers, and thus local Universities should be seen
by MNCs as a good pool of competences that will help ensure the sustainability of the technology
transferred. Universities and R&D institutions understand the local context and possess the
knowledge that is valuable to MNCs. As well, they should be considered as the right partners for
conducting joint research projects for technology maintenance or improvement, leading in some
cases to new and innovative products or services.
However, although the recognised potential benefits of such partnerships between Thai Universities
and MNCs exist, there are too few relationships, or they are strictly limited to providing some
internship to students as part of a social contribution to the Thai society.

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Thus, our study seeks to better understand the above factors impacting the willingness of MNCs to
establish research collabouration with local Universities and to exchange knowledge. Based on Figure
1, Technology Development and Work Processes, and Competences/Skills, are the two main
dimensions contributing to play a significant role in enhancing the R&D capacity in Thailand.
Toward this end, this paper seeks to empirically examine the factors which influence the intention of
MNCs to share knowledge with Universities in Thailand. In addition, success factors and barriers to
motivate MNCs to cooperate with Thai research and education institutions have been investigated.
The present paper focuses on identifying organizational factors impacting the knowledge sharing
process between Universities and MNCs.
The next section of this paper presents a literature review on knowledge sharing concepts. Section
three outlines the organizational context of study, and the adopted research methodology. The last
section draws a model of MNC inclination to share knowledgewith a special focus to factors impacting
Technology Development and Competences and Skills.

2. Background
It is well recognised today that knowledge is one of the most competitive resources for the dynamic
global business environment (Sharif et al., 2005). Indeed, in recent years companies have strongly
focused on organising creating, transferring, searching, sharing Knowledge under the roof of so-called
Knowledge Management (Hildreth P.J., 2002). On the other side, the multidisciplinary academic world
such as philosophy, sociology, computer science have generated a large amount of publications on
various perspectives and dimensions of knowledge management (Davenport T. H, 1996), (Davis J.,
2002).
It is acknowledged that knowledge sharing is a somewhat nebulous concept, very important for
harnessing knowledge (Petersen N. J., 2002), (Little and Ray, 2002) and thus benefits from adopting
a holistic approach. Studies have focused either on knowledge sharing between organizations
(Husman and Brandt, 2001) or between units in a firm (Davis J., 2002).
Knowledge sharing is not well defined in the literature partially because the research area has not
been very active (Dixon, 2002), (Bircham-Connolly H, 2005). (Davenport T. H, 2000) define
knowledge sharing as providing ones knowledge to others as well as receiving knowledge from
others (the supply side and the demand side of knowledge sharing). A more pragmatic description of
knowledge sharing is the process through which one unit is affected by the experience of another
(Argote et al., 2003). We adopt the following definition of (Willem and Scarbrough, 2002), Knowledge
sharing process is defined as exchange of knowledge between at least two parties in a reciprocal
process allowing reshaping and sense-making of the knowledge in the new context.
Today many organizations are concerned about how organizational members share their knowledge
and accordingly have set up some incentives to motivate them to make their knowledge available to
the organization or to retrieve knowledge stored in the corporate repositories when needed (Gupta
and Michailova, 2004).
The literature shows that they are several models for knowledge sharing (Petersen N. J., 2002), (i) on
one hand, sharing knowledge forms direct interactions between people as stated in Lederbergs
model involving informal presentation to colleagues and community reaction, or Nonaka and
Takeuchis model (see Nonaka and Takeuchi, 1995) involving sharing tacit knowledge (e.g., through
apprenticeship), and on the other hand (ii) with indirect interaction through document creation such as
the drafting and delivering of reports.
However analysis of knowledge sharing practices shows that reluctance to share is dominating the
organizational reality (Husted and Michailova, 2002).
Factors affecting the behaviour of knowledge sharing have been quite heavily investigated, (Constant
et al. 1994), (Wasko et al. 2000), (Ardichvili et al., 2003), (Lee et al. 2003), (Politis 2003), however
studies have focused either on social or technological dimensions, or concern individuals within the
same organization.

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Knowledge sharing between multinational corporations and a host country through local education
and research institutions, the aim of this research, has not yet been investigated.
Our research study focuses to investigate the willingness of automotive industry multinational
corporations to share knowledge with Thai Universities.

3. Case study of automotive industries in Thailand

3.1 Context of study
Most of the developing countries consider that the automotive industry will move the country toward
an intensive industrialisation by creating a large set of related businesses. Thailand aims to be
regarded as the Detroit of Asia. The country has engaged in the last few decades in the development
of the automotive industry, with a special focus on domestic auto-assembly. Thailand is the world's
second largest pick-up truck market after the U.S., and it is ASEAN's largest automotive market and
assembler. Today all leading Japanese car producers as well as BMW, Mercedes Benz, General
Motors, Ford, Volvo, and Peugeot, assemble cars in Thailand along with their group of subcontractors
and suppliers. Thailand has become the main production base for auto exports in South East Asia.
Thailand is considered as one of the most attractive countries for automotive investments mainly due
to factors such as the good and growing domestic market size, the relative political stability, liberal
trade and investment policy, and the lack of a "national car program".
The automotive industry is Thailand's third largest industry, employing an estimated total workforce of
about 225,000 employees, and with a total production capacity of around 1,270,100 cars and trucks
per year.
Japanese-make automobiles have dominated the local auto market; with nearly 90% market share
but other global vehicle manufacturers investments are growing consistently, creating a very dynamic
industry. New global parts manufacturers are in the process of relocating some of their operations to
Thailand.
Thailand has 16 vehicle assemblers; most of them are large-scale foreign owned or joint venture
enterprises. As well, there are more than 1100 small and medium sized companies working as
suppliers of original equipment (OEM), or producing replacement equipment (REM).
The automotive industry in Thailand is very concentrated with most of the factories located in the
Samut Prakarn province (approximately 20 km south of Bangkok), followed by Rayong (approximately
130 km south-east of Bangkok).
The largest car producer is Toyota, and in 2003 it was the first manufacturer to establish a local R&D
centre in Thailand. However, this type of initiative, a cooperative arrangement between MNCs and
local universities, is so far not a widespread practice in Thailand. Therefore, there is a stringent need
to understand the mechanisms allowing for knowledge transfer and sharing, if Thailand wants to
position itself as a very competitive country, not only in the automotive industry but in other industrial
sectors as well.

4. Methodology of study
Knowledge sharing is a context-embedded process, making its measurement difficult, and there is so
far no standard method to measure the sharing process.
With the aim of understanding the knowledge flow/transfer and the learning processes between
foreign companies and local Universities, we have undertaken a qualitative approach. Several
focused and semi structured interviews have been conducted with different managers from
automotive companies and from people working at universities. The aim was to identify the current
situation in terms of University-Industry (UI) relationships and to investigate the indicators or
mechanisms contributing to the increase of the willingness of automotive companies to share their
knowledge with Thai Institutions.

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The research study was conducted with 5 automotive industry companies situated in Rayong,
approximately 30 Km South from Bangkok. The organizations are all led by Japanese senior
managers.
In addition, a second set of data based on literature reviews and analysis of corporate documents has
been undertaken.
Finally, we are in the process of finalising (the analysis is still an ongoing process) a third set of data
collection, based on a questionnaire survey. We present some preliminary results from those data.
The questionnaire included both closed and opened-ended questions, and the survey was conducted
from March 1 to April 30, 2009. The questionnaire was distributed to 150 companies, with 110
responses being usable, and 5 considered as being incomplete.
The reliability and validity of questionnaire were tested by using Cronbachs alpha in which a value
above 0.6 is adequate (Nunally, 1978).
From our interviews, we have identified several dimensions impacting the knowledge sharing intention
(KSI) of companies with Thai institutions that are presented in figure 2. In addition, our questionnaires
were designed to measure these various determinants of intention to share knowledge of MNCs.
We have formulated the following eight hypotheses that concerns both implicit and explicit knowledge.
Hypothesis 1: The level of Top Executive Decision-making has a positive effect on the intention to
share knowledge of MNCs
Hypothesis 2: The flexibility of the MNCss policy has a positive effect on the intention to share
knowledge of MNCs
Hypothesis 3: The number of years spent in Thailand has a positive effect on the intention to share
knowledge of MNCs
Hypothesis 4: The intensiveness of R&D strategy has a positive effect on the intention to share
knowledge of MNCs
Hypothesis 5: The Level of Confidential Information has a positive effect on the intention to share
knowledge of MNCs
Hypothesis 6: The level of technology intensiveness has a positive effect on the intention to share
knowledge of MNCs
Hypothesis 7: The existence of a knowledge creation system has a positive effect on the intention to
share knowledge of MNCs
Hypothesis 8: The level of benefits has a positive effect on the intention to share knowledge of MNCs

4. Findings
The hypotheses have been tested by performing a series of multiple regression analyses. All
statistical tests were carried out at a 5 percent significance level. We tested the hypotheses for
implicit and explicit knowledge.
Table 1 shows the results of hypothesis tests related to Explicit Knowledge sharing. The explanatory
power (R2 value) of 0.343 and adjusted R2 value of 0.283 indicates that the overall model is
acceptable based on Falk and Miller (2000). Falk and Miller suggested that an explanatory power
greater than 0.1 is acceptable. The explanatory power for the multiple regression analysis under
Implicit Knowledge types is 0.362 and the adjusted R2 value is 0.303.
There are three variables that are supported. The number of years spent in Thailand, the level of
confidential information, and the level of benefits all influence the intention of MNCs to share
knowledge. The numbers of years that MNCs have been established in Thailand indicates a positive
impact on the intention to share knowledge. It implies that the MNCs are more willing to establish

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partnerships with Thai education and research institutions. However, according to the follow up
interviews, collabouration is currently seen as more a social involvement, and belongs to the
corporate social responsibilities programme of the companies. In general, this is reflected in the
offering of study grants or internship within the enterprise.
Table 1: Results of hypothesis tests the Intention to share explicit knowledge
Independent Variable
Top Executive Decision Power

Standardized Coefficient
0.106

Hypothesis Test
H1 was not supported

Flexibility
Years
R&D Strategy
Confidential Information
Technology Intensive
Knowledge
Benefits Level

- 0.231
0.389*
0.204
- 0.265*
0.102
0.080
0.288*

H2 was not supported

H3 was supported
H4 was not supported
H5 was supported
H6 was not supported
H7 was not supported
H8 was supported

In addition, the results show that the level of confidential information has a negative impact on the
intention to share knowledge. One main issue is related to the protection of knowledge seen as
having a competitive advantage to the MNCs. The clear lack of an intellectual property strategy in
Thailand makes the companies quite often reluctant to involve outside people in their business
routines or within the premises of the enterprise. Trust is seen as a fundamental core value, and
especially in South East Asia countries which would rather adopt the business style relationship rather
than the deal focused relationship.
The perception of expected benefits greatly impacts the intention to share. Therefore, benefits should
be clearly evaluated and highlighted in order to promote stronger collabouration. The benefits as
stated in the interviews are related to cost reduction, enhancing the skills of employees, gaining a
better position in the market place, and so forth.
The level of benefits shows a significant positive relationship to the level of knowledge sharing
intention. The MNCs are more willing to share knowledge only when they see clear benefits to
themselves from the collabouration. In this case, knowledge is often stored in repositories whenever
codification is possible. The sharing process is more formalised though agreements or contracts.
Table 2: Results of hypothesis tests the intention to share implicit knowledge
Independent Variable
Top Executive Decision Power

Standardized Coefficient
0.232*

Hypothesis Test
H1 was supported

Flexibility
Years
R&D Strategy
Confidential Information
Technology Intensive
Knowledge
Benefits Level

- 0.021
0.024
0.297*
- 0.508*
0.046
- 0.092
0.225*

H2 was not supported

H3 was supported
H4 was supported
H5 was supported
H6 was not supported
H7 was not supported
H8 was supported

Table 2 shows that five variables are supported by our hypothesis: Top executive decision, the
number of years in Thailand, the important level of R&D strategy, the level of confidential information,
and the level of benefits shows significant impact to the intention to share knowledge.
Compared to the previous table, top executive decision-making and the importance of R&D adopted
strategy, play a crucial role in the intention to share tacit knowledge that is considered a more
rigorous activity. Sharing tacit knowledge implies the need to put actively in place some strategies
such as personalisation. For example, networking is important and requires more time from both
parties. Therefore, the strong involvement of leadership in the decision making is crucial for a
successful collabouration with universities. In addition, companies that have a clear focus on
engaging R&D efforts are more prone to share their tacit knowledge.
Model KSI Based on the interviews, literature review and the results of the conducted surveys, we
have identified several dimensions that could impact the knowledge sharing intention (KSI) of
multinational corporations with Thai universities or research institutions.

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They are listed as follow:

Business characteristics

socio-technical, environmental and political facilitators or inhibitors

Intended benefits

Information use by the University or their absorptive capacity

The four dimensions rely strongly on the type of shared knowledge, the level of confidentiality and the
Universities perspectives (absorptive capacity). These factors were strongly highlighted by the
interviewed leaders.
The following figures summarize the key finding.

Costs

Quality
Rewards
Top
Executive
Decision

Better
Skills

Duration of
stay in
Thailand

Position in
the Market

Intrinsic &
Extrensic
motives
TRUST

Intented

Adequate
infrastruture

Benefit

Organisationnel
culture

Flexible
Policy

Learning
Training

Business
Charateristics

R&D Strategy

Laws &
regulation

Metrics

Metrics

Socio-technical
environmentalpolitical factors

KS
Intention

Political
stability

Information Use

Level of
data/product
confidentiality

Legal
isues &
regulation

Absorptive capacity
IPR

Training
Organisationnel
structure

Collaboration
Collaboration
Communication

Figure 2: Dimensions of knowledge sharing intention

Indicators that play an important role in fostering knowledge sharing process are related to perceived
benefits. It was mentioned several times during interviews that an increase in the products quality,
better positioning in the competitive market, or reducing costs, will positively influence the companies
relationship with the education and research institutions.
The role of top executives in successful collabourations should be considered. Leadership is central in
the establishment of knowledge sharing or transfer.
The Cultural framework for implementation depends on the organizational structure and the flow of
decision-making. The degree of involvement, transparency, shared vision and goals are essential
prerequisites for successful knowledge sharing process.
Organizational structure impacts on the enabler organizational culture in terms of restricting
collabouration, learning and trust. This is greatly reflected in the business characteristics and in the
use of information by Universities.
Communication is also very crucial in the establishment of good relationships between companies
and research or education institutions. Very often different segments of people might share conflicted
interests in the process of knowledge transfer. Often enterprises are concerned with the intellectual
property right, or lack of transparencies, in their interaction with Universities. language barriers
(foreign language or academic and industrial languages) can also hamper clear and smooth
communications.
Very often there are conflicting goals and expectations, theoretical interests of scholars versus the
day-to-day concerns of managers, technological priorities of researchers versus the business

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priorities of personnel managers and labour leaders. Conflicting interests of the stakeholders can be
so acute that it will hamper the knowledge sharing intention.
As well, political stability and dedicated laws and regulation can increase the willingness of MNCs to
cooperate more freely.

5. Conclusion
Knowledge Management is a new inter-disciplinary strategy in todays business world. It is well
recognized that knowledge is an important asset for organizations. Making the most value from
employees knowledge is an important element of a resource-based strategy for firms. In addition,
firms create and acquire new knowledge in many ways such as in-house or outsource R&D.
Knowledge sharing between firms and Universities has been always considered as a challenging
task. This statement is even more valid for emerging or developing countries such as Thailand.
In this paper, we have discussed the effects that Multinational corporations could have on technology
diffusion and development of potential R&D within Thailand. Although the Thai government has
implemented policy in order to foster and attract R&D based Foreign Direct Investment (FDI). Our
study have highlighted that there are still barriers impeding the fluidity of knowledge sharing between
multinational corporations and Thai universities.
We have conducted a cross-methodologies based on qualitative and quantitative approaches to
collect data.
Based on the analysis of the data, we have delineated a model of intention to share both implicit and
explicit knowledge of MNCS with Thai Universities and research institutions. The knowledge sharing
intention depends of 4 elements such business characteristics, the perceived benefits, capacity to
absorb information or the usability of the knowledge and socio-technical environmental political
factors.
Relation between factors such as industrial characteristics, firm characteristics and business models
and how they could play substantial role in the knowledge sharing mechanisms has been closely
investigated.
However, analysis and interpretation (Hermeneutics) of collected data are subject to the cognitive skill
and the current thinking of the researcher/observer. Accordingly, the elabourated model does not
definitely reflect all the aspects and dimensions of this highly complex area of Knowledge sharing and
learning mechanisms. Furthermore the selected indicators might enlighten only some perspectives of
those mechanisms. Therefore further research works should be conducted in order to confirm or
refute the result of our study. This will be done by completing our study, with further analysis of the
collected data. In addition, we intend to expand the study to other industries in Thailand.

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